The world will spend US$2.3 trillion on information technology hardware, software and services in 2016, but that represents a “major slowdown” according to analyst firm IDC.
Smartphones and China are mostly to blame for the decline. The former is at fault because new buyers are drying up, which makes it harder for smartphones to contribute their current half of 2015's six per cent growth rate. The latter is a problem because it's experiencing uncertain economic conditions and local organisations just aren't spending as a result..
The result is a prediction of global growth at around two per cent, rather lower than the five or six percent the world's clocked up in years since the worst of the financial crisis ebbed.
But even that growth produced two per cent fall in technology spend when counted in US dollars, thanks to that currency's appreciation which meant buyers beyond the land of the free sent less money to US companies.
There were some bright spots in 2015. IDC says “Spending on cloud infrastructure was also strong throughout the year, resulting in growth of 16% for the server market and 10% for storage systems.” Spending on enterprise software rose seven per cent, as organisations snapped up “analytics, security, and collaborative applications.”
But for this year IDC thinks that growth will “soften” and it's also backing away from previous optimism about PC sales.
There's nobody riding to the rescue from developing economies in 2016. Russia and Brazil are in the doldrums and while India is surging, expected eight per cent growth from the sub-continent represents a fall from last year's 13 per cent and won't therefore be enough to lift global growth rates.
At least the United States is doing better: its predicted four per cent growth will make it a standout and certainly contrasts with IDC's prediction that Western European spending will grow by an anaemic one per cent.
Cloud and related infrastructure spending will be ongoing bright spots everywhere, but the forecast for this year is generally grim.
Buckle in then, dear readers, for a year in which budgets look to be tight and new toys will be few and far between.
The firm's forecast for 2017 is a little rosier, with India's increased spend and continued US investment expected to buoy markets. ®